In sociology, the iron cage is a term coined by Max Weber for the increased rationalization inherent in social life, particularly in Western capitalist societies. The "iron cage" thus traps individuals in systems based purely on teleological efficiency, rational calculation and control. Weber also described the bureaucratization of social order as "the polar night of icy darkness".
The original German term is stahlhartes Gehäuse; this was translated into "iron cage", an expression made familiar to English language speakers by Talcott Parsons in his 1930 translation of Weber's The Protestant Ethic and the Spirit of Capitalism. This choice has been questioned recently by scholars who prefer the more direct translation: "shell as hard as steel".
Weber (in Parsons' translation) wrote:
In Baxter's view the care for external goods should only lie on the shoulders of the 'saint like a light cloak, which can be thrown aside at any moment.' But fate decreed that the cloak should become an iron cage.
Weber became concerned with social actions and the subjective meaning that humans attach to their actions and interaction within specific social contexts. He also believed in idealism, which is the belief that we only know things because of the meanings that we apply to them. This led to his interest in power and authority in terms of bureaucracy and rationalization.
Weber states, "the course of development involves... the bringing in of calculation into the traditional brotherhood, displacing the old religious relationship."
Modern society was becoming characterized by its shift in the motivation of individual behaviors. Social actions were becoming based on efficiency instead of the old types of social actions, which were based on lineage or kinship. Behavior had become dominated by goal-oriented rationality and less by tradition and values. According to Weber, the shift from the old form of mobility in terms of kinship to a new form in terms of a strict set of rules was a direct result of growth in accumulation of capital, i.e. capitalism.
Bureaucracies were distinct from the feudal system and patrimonialism where people were promoted on the basis of personal relationships. In bureaucracies, there was a set of rules that are clearly defined and promotion through technical qualifications and seniority and disciplinary control. Weber believes that this influenced modern society and how we operate today, especially politically.
Bureaucratic formalism is often connected to Weber's metaphor of the iron cage because the bureaucracy is the greatest expression of rationality.
Weber wrote that bureaucracies are goal-oriented organizations that are based on rational principles that are used to efficiently reach their goals. However, Weber also recognizes that there are constraints within the "iron cage" of such a bureaucratic system.
Bureaucracies concentrate large amounts of power in a small number of people and are generally unregulated. Weber believed that those who control these organizations control the quality of our lives as well. Bureaucracies tend to generate oligarchy; which is where a few officials are the political and economic power. According to Weber, because bureaucracy is a form of organization superior to all others, further bureaucratization and rationalization may be an inescapable fate.
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Because of these aforementioned reasons, there will be an evolution of an iron cage, which will be a technically ordered, rigid, dehumanized society. The iron cage is the one set of rules and laws that we are all subjected and must adhere to. Bureaucracy puts us in an iron cage, which limits individual human freedom and potential instead of a "technological utopia" that should set us free. It is the way of the institution, where we do not have a choice anymore. Once capitalism came about, it was like a machine that you were being pulled into without an alternative option;. Laws of bureaucracies include the following:
"Rational calculation . . . reduces every worker to a cog in this bureaucratic machine and, seeing himself in this light, he will merely ask how to transform himself... to a bigger cog... The passion for bureaucratization at this meeting drives us to despair."
Bureaucratic hierarchies can control resources in pursuit of their own personal interests, which impacts society's lives greatly and society has no control over this. It also affects society's political order and governments because bureaucracies were built to regulate these organizations, but corruption remains an issue. The goal of the bureaucracy has a single-minded pursuit that can ruin social order; what might be good for the organization might not be good for the society as a whole, which can later harm the bureaucracy's future. Formal rationalization in bureaucracy has its problems as well. There are issues of control, depersonalization and increasing domination. Once the bureaucracy is created, the control is indestructible. There is only one set of rules and procedures, which reduces everyone to the same level. Depersonalization occurs because individual situations are not accounted for. Most importantly, the bureaucracies will become more dominating over time unless they are stopped. In an advanced industrial-bureaucratic society, everything becomes part of the expanding machine, even people. 
While bureaucracies are supposed to be based on rationalization, they act in the exact opposite manner. Political bureaucracies are established so that they protect our civil liberties, but they violate them with their imposing rules. Development and agricultural bureaucracies are set so that they help farmers, but put them out of business due to market competition that the bureaucracies contribute to. Service bureaucracies like health care are set to help the sick and elderly, but then they deny care based on specific criteria.
Weber argues that bureaucracies have dominated modern society's social structure; but we need these bureaucracies to help regulate our complex society. Bureaucracies may have desirable intentions to some, but they tend to undermine human freedom and democracy in the long run.
Rationalization destroyed the authority of magical powers, but it also brought into being the machine-like regulation of bureaucracy, which ultimately challenges all systems of belief.
It is important to note that according to Weber, society sets up these bureaucratic systems, and it is up to society to change them. Weber argues that it is very difficult to change or break these bureaucracies, but if they are indeed socially constructed, then society should be able to intervene and shift the system.